'Smart' students want interest back on loans - ACT

The ACT Party thinks students are in favour of putting interest back on loans because it'll stop people making "irresponsible choices" when it comes to education.

A Productivity Commission report has recommended scrapping interest-free loans, which were introduced by Labour in 2006 and kept in place by National under John Key.

"I don't think there's any appetite to put interest back on student loans," the Prime Minister said on Thursday.

But ACT leader David Seymour says the Government is "running for the hills" by flatly ruling out the idea.

"Students are actually smart enough they can either pay for their own education once, or they can pay for a whole lot of people making irresponsible choices through higher taxes for their entire career," he told Newshub.

Tertiary Minister Steven Joyce says there's nothing in the report which will change the Government's mind.

The New Zealand Union of Students' Associations doesn't want it. President Linsey Higgins says adding interest would penalise women and primary caregivers in particular, as they're often on lower incomes and will end up paying off more interest than people on higher incomes.

Students Newshub spoke to weren't keen either.

"I think this is a big disenabler for students who are studying and looking to study," said second-year Massey business student Nikita Skipper.

"I would hope that decisions like these would include a student voice."

Labour has promised to slowly introduce a limited amount of free tertiary education.